Ford has reported reduced sales and revenue and a huge swing to a net loss for the first quarter of 2006, compared with Q1 2005. But there were pre-tax profit improvements in South America and Europe to dilute the sea of red ink surrounding the massive restructuring under way in North America.
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The net loss was 64 cents per share, or $US1.2bn, which compares with net income of 60 cents per share, or $1.2bn, in the first quarter of 2005.
Ford’s first-quarter earnings from continuing operations, excluding special items, was 24 cents per share, or $458m and total sales and revenue in the first quarter was $41.1bn, down $4.1bn from a year ago.
Special items that reduced earnings by 88 cents per share in the first quarter included a charge of $1.7bn, or 61 cents per share, for costs associated with layoff and jobs bank benefits and voluntary termination packages; a charge of $414m, or 14 cents per share, of related non-cash pension curtailment charges; facility-related costs, primarily associated with last month’s idling of the St. Louis assembly plant, of $281m or 10 cents per share; and costs of $95m, or 3 cents per share, associated with other staff cut programmes.
On a pre-tax basis, excluding special items of $2.5bn, worldwide automotive sector losses in the first quarter were $184m compared with a pre-tax profit of $580m, excluding special items of $107m, during the same period a year ago.
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By GlobalDataWorldwide automotive sales for the first quarter declined to $37.0bn from $39.3bn in the same period last year.
Worldwide vehicle unit sales in the quarter were 1,722,000, up from 1,716,000 a year ago.
For the first quarter, The Americas reported a pre-tax automotive loss of $323m, excluding special items, compared to a pre-tax profit of $741m in the same period a year ago.
The North America automotive operations reported a pre-tax loss of $457m compared with a pre-tax profit of $664m. Sales were $19.8bn, down from $21.1bn a year ago.
South America automotive operations reported a first-quarter pre-tax profit of $134m, an increase of $57m from a $77m pre-tax profit a year ago. Sales improved to $1.2bn from $866m.
International operations reported a combined automotive pre-tax profit, excluding special items, of $301m, an improvement of $200m from first quarter 2005.
Ford Europe and PAG automotive operations also reported a pre-tax profit of $254m, an improvement of $250m from the same period a year ago.
Ford Europe‘s pre-tax profit was $91m compared with a pre-tax profit of $59m a year earlier. Sales were $6.8bn, compared with $7.7bn.
PAG reported a pre-tax profit of $163m for the first quarter, compared with a pre-tax loss of $55m for the same period in 2005. The improvement primarily reflected cost improvements at Volvo, Jaguar, and Land Rover and increased sales of the Range Rover Sport.
First-quarter sales were $7.1bn, compared with $7.6bn a year ago.
Asia Pacific and Africa reported a pre-tax profit of $2m, compared with a pre-tax profit of $43m a year ago. The decline primarily reflected lower Falcon volumes in Australia, partially offset by improved performance in joint ventures, primarily in China. Sales were $1.7bn, compared with $2.0bn in 2005.
Ford’s share of Mazda profits and associated operations was $45m, compared with $54m during the same period a year ago. The decline primarily reflected lower gains during the quarter on an investment in Mazda’s convertible bonds.
For the first-quarter, the financial services sector earned a pre-tax profit of $744m, compared with pre-tax profits of $1.1bn a year ago.
Ford Motor Credit Company reported net income of $479m in the first quarter of 2006, down $231m from earnings of $710m a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $751m in the first quarter, compared with $1.1bn in the previous year. The decrease in earnings primarily reflected higher borrowing costs, the impact of lower receivable levels and higher depreciation expense, partially offset by improved credit loss performance.
The company previously announced it anticipated full-year pre-tax special items of about $1bn, with further study required to assess additional costs stemming from the Way Forward restructuring plan and to determine appropriate accounting for these costs. The present expectation is that total full-year pre-tax special items, including these jobs bank-related costs and associated pension curtailment charges, will be about $3.4bn.
“I am confident that we are confronting our challenges head-on and that we will succeed in our turnaround and getting back on track to ensure our long-term success,” said chairman and chief executive officer Bill Ford.
“We are clearly in a period of transition. However, I am pleased with the changes under way to make Ford a leaner, more innovative company.”
